Peak XV-backed Kenko Health shuts down after running out of funds

Despite securing more than $13.7 million in funding from investors like Peak XV Partners, Orios Venture Partners, and Beenext, the health startups faced challenges securing key licences

Kenko Health, a once-promising Mumbai-based healthcare startup, has ceased operations after facing financial and operational challenges, according to a report by Moneycontrol. Despite securing over $13.7 million in funding from reputed investors such as Peak XV Partners, Orios Venture Partners, and Beenext, the company struggled to stay afloat due to a cash crunch and failed attempts to obtain an insurance licence.

Founded in 2019, Kenko Health quickly gained traction, offering subscription-based health plans that included outpatient department (OPD) benefits, medicines, and healthcare products. The startup showed significant revenue growth, jumping from Rs 5 crore in financial year 2021-22 (FY22) to Rs 85 crore in FY23. However, these financial gains were overshadowed by mounting losses, which escalated to Rs 68 crore during the same period.

 

Kenko Health failed to secure licences

The company’s downfall was attributed to its inability to secure a crucial insurance licence from the Insurance Regulatory and Development Authority of India (Irdai). Despite efforts to meet stringent regulatory requirements, including a mandate for domestic capital as the lead investor, Kenko was unable to obtain the necessary approval. This setback, coupled with the failure to raise Rs 220 crore in 2023, intensified financial pressures, eventually leading to the shutdown.

The situation further deteriorated when Kenko’s founders, Aniruddha Sen and Dhiraj Goel, communicated to employees via emails in July and August that the company had "run out of funds" and was facing legal action from creditors, the report added. The firm was taken to the National Company Law Tribunal (NCLT) by a debt fund that had extended a loan to them, marking the beginning of the end for the struggling startup.

Legal troubles and salary delays

Kenko’s offices in Mumbai and Bengaluru were shuttered, leaving its 100 employees grappling with unpaid salaries, some of which were overdue by more than three months. Despite the founders infusing approximately Rs 9 crore of their personal funds to cover salaries between October and December 2023, the company’s financial woes persisted.

The crisis also sparked legal actions from third-party administrators (TPAs) responsible for managing Kenko’s claims and coordinating payments with hospitals. One TPA filed an FIR against the company over unpaid dues, while another firm is considering similar legal steps.

Many Kenko’s employees were forced to seek new employment as the company’s troubles became increasingly apparent. Although some employees were able to move on, others remain in limbo, awaiting unpaid dues.